Thursday 4 July 2013

ILTID 3:Going Global

Industrial Location Theory is Dead: Part 3

Going Global


The wage cost of the domestic labour force and their increasing militancy in the 20th Century caused companies to start looking overseas for cheaper, less unionised workers. The improving cost-efficiency of transport meant that these companies could pretty much look anywhere in the world and their eyes alighted on the Less Economically Developed Countries (LEDCs) which at the time included both India and China. The huge workforce available meant that products could be manufactured very cheaply, vastly undercutting domestic labour costs, and imported cheaply to the UK.

Another major technological shift enabled the globalisation of manufacturing in the 1950s: containerisation. It might not seem world shattering at first, but the simple use of standard sized (2.4m x 2.4m x 3.0m) boxes for transporting cargo meant that it could be pulled by lorries or trains and transferred on and off enormous ships quickly and, consequently more cheaply. The boxes could be stacked like Lego blocks and loaded quickly. This meant that docklands like those in London’s East End, which had been the beating heart of Britain’s global trading Empire, became obsolete almost overnight. The new system meant that much bigger ships could be used and these did not fit into the old docks and the journey up the Thames Estuary wasted time. It made much more sense to use a custom built deep water port at Felixstowe. The London Dockland’s huge extended labour force became superfluous and expensive as one man in a crane could load the new cargo containers more quickly: the turn-around time for a cargo boat was slashed from days to a matter of hours.